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Reuters poll: Chinese economy expected to expand by 6.2% in 2019

Reuters’ latest poll shows that institutions are still favouring the Chinese economy to slow further despite policy support

China
  • China 2019 GDP growth seen at 6.2% (January poll at 6.3%)
  • China 2020 GDP growth seen at 6.0%
  • China 2019 inflation seen at 2.1% (January poll at 2.3%)
  • Sees PBOC keeping benchmark lending rates steady in 2019
  • Sees PBOC cutting RRR by another 150 bps before the end of the year
The numbers suggest that the 88 institutions surveyed see the Chinese economy slowing to a 29-year low of 6.2% but that still falls within the target range set out by authorities of between 6.0% and 6.5%. I wouldn’t be too fussed about the numbers to be honest.
Just take polls like these as a general sentiment indicator. In this case, it suggests that traders/investors are still rather skeptical on the Chinese economy rebounding and that the global growth slowdown will continue to be a key theme for financial markets throughout this year and next year as well.

Singapore’s central bank leaves its SGD policy unchanged

Monetary Authority of Singapore leaves monetary policy unchanged

(the Bank manages its mon pol through the exchange rate rather than interest rates)
  • Maintains the current rate of appreciation of the $NEER policy band
  • No change to width and centre level
  • Policy stance is consistent with a modest and gradual appreciation path of the SNEER policy band that will ensure medium-term price stability.
  • MAS is revising the 2019 forecast range for mas core inflation to 1-2%, from 1.5-2.5% previously. core inflation is likely to come in near the mid-point of the revised forecast range.
  • 2019 forecast for CPI-all items inflation was revised down to 0.5-1.5% from 1-2% in February, taking into account the decline in global oil prices in late 2018. this forecast for headline inflation remains unchanged.
  • Despite some pickup in labour costs, inflationary pressures are mild and should remain contained.
  • GDP expected to come in slightly under midpoint of 1.5 – 3.5% 2019 forecast
Unchanged policy was the expected.
At the same time, Singapore GDP data for Q1 2019
  • 2.0% q/q (vs. 1.2% expected and 1.4% prior)
  • 1.3% y/y (expected 1.5%, prior 1.9)

Assange faces extradition to US after London arrest

Julian Assange is facing extradition to the US following his arrest at the Ecuadorean embassy in London, charged with involvement in a computer hacking conspiracy that led to one of the “largest compromises of classified information in US history”.

Hours after he was carried out of the mission in Knightsbridge by police, the WikiLeaks founder was found guilty at Westminster Magistrates’ Court of jumping bail on a 2010 extradition order to Sweden. Mr Assange faces up to 12 months in prison.

The US authorities are seeking the extradition of the 47-year-old activist, alleging that he helped former US army intelligence analyst Chelsea Manning leak a treasure trove of official US documents and communications in a scandal that became known as “Cablegate”.

The US justice department indictment, filed in March 2018 but unsealed on Thursday, accused Mr Assange of helping Ms Manning to try to crack a password to Pentagon computers.

Mr Assange’s arrest ends a seven-year saga that has pitted international legal authorities against one of the most controversial transparency advocates. He has claimed that the original case against him in Sweden over an alleged rape has been part of a US-led conspiracy.

Mr Assange’s US lawyer, Barry Pollack, said the arrest raised serious issues over the ability of advocates and journalists to uncover government wrongdoing, and called the US case “unprecedented”.

“While the indictment against Julian Assange disclosed today charges a conspiracy to commit computer crimes, the factual allegations against Mr Assange boil down to encouraging a source to provide him information and taking efforts to protect the identify of that source,” he said.

If found guilty on the American charges, Mr Assange faces a maximum prison sentence of five years, the US justice department said.

Swedish prosecutors said they would now examine a request by the lawyer of Mr Assange’s alleged victim to restart their investigation. They noted that they were able to reopen the probe until next August under Sweden’s statute of limitations for rape.

London’s Metropolitan Police were able to seize Mr Assange after Ecuador lifted its asylum protection and invited British authorities into the embassy. Ecuador’s president, Lenín Moreno, said in a video statement that the country had withdrawn diplomatic protection because Mr Assange had flouted the conditions of the arrangement, recently exhibiting “discourteous and aggressive behaviour”.

WikiLeaks said in a Twitter statement that the termination of Mr Assange’s asylum was “illegal”, while Russian officials, who have spoken out in defence of Mr Assange during his time in the embassy, on Thursday described his treatment as a “witch hunt”.

“The whole story, with the persecutions against him, the witch hunt, the creation of inhumane conditions of existence, obliterates freedom of speech and the right to disseminate information,” said a foreign ministry spokesperson, Maria Zakharova. “This is a blow to the rights of a journalist. And there can be no other assessment.” (more…)

After all the Brexit efforts and deadline extension agreement, GBP doesn’t care.

This quick note on sterling via ING pretty much sums it up …

GBP: Neither here nor there 
The 6 month extension of Article 50 modestly weighed on GBP given that 
  • (a) the cliff edge of hard Brexit is still in sight and not being postponed long enough; 
  • (b) the not long enough extension is unlikely to allow the BoE to hike interest rates, meaning that GBP will miss on one potential positive catalyst. 
In the meantime, the extension is unlikely to improve business confidence much, thus limiting the upside to GBP. With the bar for the Brexit deal being passed through the UK Parliament by the October deadline still rather high and the rising probability of a change in Conservative leadership ahead of the October deadline (ie Conservative Party Conference in Sep), this suggests a difficulty for EUR/GBP to move below the 0.8500 level

China trade balance data for March is due today – what to expect

The timing of the data can varied, but around 0300GMT has been good for recent releases.

First to hit will be ‘yuan terms’, followed by USD terms 9again, based on recent experience.

In February exports plummeted, which made sense given the trade tensions with the US. But is this just a back fitted narrative? The question is how much the Feb data was hit by the lunar new year holidays. Hopefully March is clearer, but Goldman Sachs warn the distortions from the holiday can persist into the first half of March.

Yuan terms

China trade balance for March: expected CNY 178.2bn, prior was CNY 34.6bn

  • Exports y/y: expected 14.8%, prior was -16.6%
  • Imports y/y: expected -9.6%, prior was -0.3%

USD terms

China trade balance: expected $7.05bn, prior was $4.08bn

  • Exports: expected 7.3%, prior -20.8%
  • Imports: expected -1.3%, prior was -5.2%

US major indices end little changed

Nasdaq the hardest hit

The US major indices are ending the day little changed. The Nasdaq is leading the indices to the downside today:
The final numbers are showing:
  • The Dow fell -0.05% or -14.17 points to 26142.99
  • The S&P closed unchanged at 2888.32
  • The Nasdaq fell -0.21% or -16.88 points to 7947.35
Some winners included:
  • United Continental, +1.46%
  • Boeing, +1.41%
  • Walmart, +1.20%
  • PNC financial ahead of their earnings tomorrow morning, +1.12%
  • DuPont, +1.04%
  • Home Depot, +1.03%
  • Netflix, +1.02%
  • Caterpillar, +1.02%
  • Delta Airlines, +0.92%
  • J.P. Morgan, +0.86% (J.P. Morgan will release earnings tomorrow morning)
  • Morgan Stanley, +0.79%
  • Southwest airlines, +0.72%
Some losers on the day included:
  • United health, -4.35%
  • Tesla, -2.77%
  • WalgreensBoots, -1.96%
  • Gilead, -1.62%
  • Merck,-1.22%
  • Pfizer, -1.08%
  • Apple, -0.83%
  • Alibaba, -0.68%
  • Twitter, -0.55%
  • Walt Disney, -0.45%
  • Visa, -0.45%
  • MasterCard, -0.44%
  • Striker, -0.42%
  • Cisco, -0.39%

AUD/USD breakout turns into a fakeout

Rally to six week high yesterday erased

Rally to six week high yesterday erased
AUD/USD has completely erased yesterday’s gain in a 50-pip fall to 0.7124 today. It’s a disheartening turn after the pair hit the highest since February 26 a day ago.
The failure to hold and close above 0.7168 underscores resistance there but on the downside there is uptrend support at 0.7075 and the April low of 0.7053.
Like so many trades in FX right, the range is dominating and we sit and wait for a break.

European shares end mostly higher

France’s CAC leads the way. UK FTSE lags

The European markets are closed and are ending with mostly gains.
  • German Dax, +0.26%
  • France’s CAC, +0.66%
  • UK’s FTSE,. -0.03%.
  • Spain’s Ibex +0.44%
  • Italy’s FTSE MIB +0.16%
In the US, major indices are near unchanged levels:
  • Dow is up 8.56 points or +0.03% at 26165.72
  • S&P is up 0.77 points or +0.03% at 2888.98
  • Nasdaq is down -6.47 points or -0.08% at 7957.76
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